Live Nation Reports Strong Fourth Quarter and Full Year 2008 Financial Results
Live Nation Reports Strong Fourth Quarter and Full Year 2008 Financial Results
- Full year revenues increased 11% driving overall Adjusted Operating Income up 20% for the year, an increase of $28 million -
- Live Nation's largest division, the North American concert division, grew Adjusted Operating Income by 58% year-over-year, or $46 million, driven primarily by organic growth and cost controls -
- Core business metrics up substantially, outpacing industry - Number of concerts produced up 33% in the fourth quarter and 32% year-over-year - Total attendance at these concerts increased 14% in the fourth quarter and 12% over last year -
- Due to a goodwill impairment of $269.9 million recorded in the fourth quarter related to decreased market capitalization, operating loss for the year was $284.2 million for Live Nation and $145.9 million for North American Music -
LOS ANGELES, March 2 /PRNewswire-FirstCall/ -- Live Nation (NYSE:LYV) , the world's largest live music company, announced today its financial results for the three and twelve months ended December 31, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20081203/LAW048LOGO-b) Quarterly Summary Results Unaudited; $in millions (except per share amounts) Q4 2008 Q4 2007 ------- ------- Revenue $916.0 $922.4 Adjusted Operating Income $28.4 $33.9 Operating Income (Loss) $(317.1) $(24.0) (with goodwill impairment of $269.9) Free Cash Flow $11.2 $(3.1) Net Income (Loss) $(337.5) $(18.4) (with goodwill impairment of $269.9) Basic and Diluted EPS $(4.33) $(0.25)
"Our fourth quarter results capped an outstanding year for Live Nation," said Michael Rapino, President and Chief Executive Officer. "We continued to successfully execute our strategy, and we generated improved results across our business. Both the number of concerts we produced and ticket sales increased over the prior year, outpacing the industry. We also achieved considerable strength in our sponsorship business, as we continued to attract larger and more profitable advertising and marketing campaigns. Looking ahead, we believe that the live music business remains resilient despite the global economic turndown and that we are well positioned to benefit from this. Our concert pipeline remains robust to date in 2009 - we are pacing in line with 2008 concert and attendance counts. Our ticketing platform is proceeding according to our plan. We are seeing steady increases in consumer traffic to our websites, and we have sold over 1 million tickets to over 1,300 shows since launching our new ticketing platform. We remain focused on maximizing the performance of our concert business and on expanding our artist-to-fan direct distribution platform to the benefit of our shareholders."
Highlights: -- Entered into a definitive merger agreement with Ticketmaster Entertainment, Inc. to create the world's premier live entertainment company with a combined enterprise value of approximately $2.5 billion. -- Continued our strategy to increase relationships with larger corporate sponsors, generating an increase in average revenue per sponsor of nearly 15% for the year. National sponsors include BlackBerry, Burger King and State Farm. Internationally, we entered into a new multi-asset/multi-platform, five-year agreement with O2. -- Launched our new ticketing platform in December 2008 using an established ticketing software system, licensed through CTS Eventim, for most of our North American owned and/or operated venues to power our online and e-commerce retail ticketing site. -- Grew our core concert business in 2008, with both the number of shows and attendance posting double-digit growth. Below are what we believe to be our key metrics related to our businesses: METRICS ($in millions except as noted) Key Drivers Q4 2008 Q4 2007 Variance 2008 2007 Variance (Qtr.) (YTD) Rights Acquisitions - Global Music Businesses Talent Costs and Other Event Direct Operating Expenses $729.8 $740.2 (1.4%) $3,314.7 $2,954.9 12.2% Talent and Other Event Expenses as % of Total Revenue 81.7% 82.1% 81.2% 81.4% Number of Live Rights (Concerts) (est.) 6,949 5,234 32.8% 22,167 16,747 32.4% Number of Ancillary Live Rights - as of period end (est.) 848 n/a n/a 848 n/a n/a Revenue Recognized for Artist Services/ Ancillary Live Rights $82.2 n/a n/a $244.5 n/a n/a Distribution Platform - Global Music Businesses Total Attendance (est.) 13,432,000 11,773,000 14.1% 52,114,000 46,437,000 12.2% International Music Festival Attendance (est.) 58,000 36,000 61.1% 1,160,000 879,000 32.0% Ancillary Revenue per Attendee - NA Music Amps only ** ** $18.35 $19.10 (3.9%) Total Revenue per Attendee (Fan) $66.49 $76.54 (13.1%) $78.34 $78.14 0.3% Sponsorship Data - Global Music and Ticketing Businesses Number of Sponsors - as of period end (est.) 840 927 (9.4%) 840 927 (9.4%) Sponsorship Revenue Recognized $33.9 $29.8 13.8% $170.9 $164.0 4.2% Average Revenue per Sponsor (rounded, whole $) ** ** $203,000 $177,000 14.7% ** not meaningful FINANCIAL HIGHLIGHTS - 4th QUARTER Q4 2008 Q4 2007 Variance $in millions Revenue North American Music $452.1 $472.6 (4.3%) International Music 195.8 304.5 (35.7%) Artist Nation 245.2 124.0 97.7% Ticketing 2.6 2.3 13.0% Other and Eliminations 20.3 19.0 6.8% $916.0 $922.4 (0.7%) Adjusted Operating Margins Income (Loss) Q4 2008 Q4 2007 North American Music $15.1 $18.7 (19.3%) 3.3% 4.0% International Music 16.0 19.5 (17.9%) 8.2% 6.4% Artist Nation 11.2 1.4 ** 4.6% 1.1% Ticketing (7.7) (2.5) ** ** ** Other and Eliminations 8.2 6.1 ** ** ** Corporate (14.4) (9.3) (54.7%) $28.4 $33.9 (16.2%) 3.1% 3.7% Operating Income (Loss) North American Music $(210.5) $(10.0) ** ** (2.1%) International Music 6.2 13.0 (52.3%) 3.2% 4.3% Artist Nation (88.0) (9.2) ** (35.9%) (7.4%) Ticketing (11.2) (4.4) ** ** ** Other and Eliminations 6.2 3.4 ** ** ** Corporate (19.8) (16.8) (17.9%) $(317.1) $(24.0) ** ** (2.6%) ** not meaningful
NOTE: Certain reclassifications have been made to the 2007 results to conform to the 2008 presentation to report discontinued operations.
The highlights of our financial information for the fourth quarter of 2008 as compared to the fourth quarter of 2007 are as follows:
Revenue change - Total decrease of $6.4 million, primarily driven by: -- $18.1 million - Acquisitions of Heineken Music Hall (Holland), DF Concerts (Scotland), Luger and Moondog (Sweden) and the Main Square Festival (France) in International Music. -- ($126.8) million - Decrease in International Music driven by the disposition of a portion of the Italy promotion business along with reduced promotion activity in the United Kingdom, Belgium, Italy and Spain primarily related to arena events. -- $27.1 million - Acquisitions of Signatures and Anthill in Artist Nation. -- $94.1 million - Increase in Artist Nation revenue driven by the strong results of Madonna's Sticky & Sweet tour in 2008.
Adjusted Operating Income (Loss) change - Total decrease of $5.5 million, primarily driven by:
-- ($4.2) million - Decrease in International Music due to show results primarily in Belgium, Italy (partly due to the disposition discussed above), Sweden and Spain. -- $8.0 million - Increase in Artist Nation revenue driven by the strong results of Madonna's Sticky & Sweet tour in 2008. -- $2.5 million - Acquisitions of Heineken Music Hall (Holland), DF Concerts (Scotland), Luger and Moondog (Sweden) and the Main Square Festival (France) in International Music and Signatures and Anthill in Artist Nation. -- ($5.2) million - Decline in Ticketing primarily due to higher salary costs, consulting fees and other expense related to building our ticketing infrastructure. -- ($5.1) million - Increased costs in Corporate driven by costs related to employees and consulting costs.
Operating Income (Loss) change - Total decrease of $293.1 million, primarily driven by:
-- ($5.5) million - Overall decrease in Adjusted Operating Income noted above. -- ($269.9) million - Impairment of goodwill recorded in the fourth quarter of 2008 of $189.2 million in North American Music and $80.7 million in Artist Nation driven by the company's market capitalization at year-end compared to total asset value as required by accounting literature. FINANCIAL HIGHLIGHTS - YEAR ENDED DECEMBER 31 2008 2007 Variance $in millions Revenue North American Music $2,236.0 $1,976.5 13.1% International Music 1,182.6 1,078.7 9.6% Artist Nation 664.2 573.5 15.8% Ticketing 22.4 11.4 ** Other and Eliminations 61.6 115.4 ** $4,166.8 $3,755.5 11.0% Adjusted Operating Income Margins (Loss) 2008 2007 North American Music $126.3 $80.0 57.9% 5.6% 4.0% International Music 88.7 78.4 13.1% 7.5% 7.3% Artist Nation (2.0) 8.6 ** (0.3%) 1.5% Ticketing (18.7) (5.9) ** ** ** Other and Eliminations 20.7 15.2 35.9% ** ** Corporate (45.2) (35.2) (28.4%) $169.8 $141.1 20.3% 4.1% 3.8% Operating Income (Loss) North American Music $(145.9) $14.6 ** ** 0.7% International Music 57.0 78.2 (27.1%) 4.8% 7.2% Artist Nation (123.8) (14.1) ** ** ** Ticketing (25.9) (10.5) ** ** ** Other and Eliminations 12.4 (0.2) ** ** ** Corporate (58.0) (51.2) (13.3%) $(284.2) $16.8 ** ** 0.4% ** not meaningful
NOTE: Certain reclassifications have been made to the 2007 results to conform to the 2008 presentation to report discontinued operations.
The highlights of our financial information for the year ended December 31, 2008 as compared to 2007 are as follows:
Revenue change - Total increase of $411.3 million, primarily driven by: -- $168.3 million - Increase in North American Music primarily due to increases in the number of events, ancillary revenue per attendee, attendance and average ticket prices at our owned and/or operated amphitheaters and third-party venues. 2008 included a strong line-up of artists including Dave Matthews Band, Journey and Jimmy Buffett, and strong results for arena tours such as Coldplay, Van Halen and the Trans-Siberian Orchestra. -- $91.2 million - Acquisition of HOB Canada in North American Music. -- $106.9 million - Acquisitions of AMG, Heineken Music Hall, DF Concerts, Luger and Moondog and the Main Square Festival in International Music. -- ($59.3) million - Decrease in Artist Nation, despite a strong fourth quarter with the 2008 Madonna tour, based on the overall volume and size of tours in 2008 as compared to 2007. -- $150.0 million - Acquisitions of Signatures and Anthill in Artist Nation. -- ($54.1) million - Decline in other operations due to reduced participation in theatrical productions in our United Kingdom theater operations in 2008 and due to our sale in 2007 of a stage production in North America. -- $8.2 million - Foreign exchange movements, primarily in International Music.
Adjusted Operating Income (Loss) change - Total increase of $28.7 million, primarily driven by:
-- $43.3 million - Increase in North American Music primarily due to cost controls on talent buying and other variable expenses, overall increases in ancillary revenue per attendee, higher ticket sales through our internal ticketing operations, higher average ticket prices, increased activity at our owned and/or operated amphitheaters and strong arena tours. -- $22.9 million - Acquisitions of HOB Canada in North American Music; AMG, Heineken Music Hall, DF Concerts, Luger and Moondog and the Main Square Festival in International Music; and Signatures and Anthill in Artist Nation. -- ($16.9) million - Decline in Artist Nation based on the overall volume and size of tours in 2008 as compared to 2007. -- ($12.8) million - Decline in Ticketing primarily due to higher salary costs and other expenses related to building our ticketing infrastructure. -- ($10.0) million - Increased headcount, consulting fees and related costs in Corporate.
Operating Income (Loss) change - Total decrease of $301.0 million, primarily driven by:
-- $28.7 million - Overall increase in Adjusted Operating Income noted above. -- ($269.9) million - Impairment of goodwill recorded in the fourth quarter of 2008 of $189.2 million in North American Music and $80.7 million in Artist Nation driven by the company's market capitalization at year-end as discussed above. -- ($30.7) million - Increase in depreciation and amortization expense primarily due to impairments recorded in 2008 of $12.1 million related to three venues and an intangible asset in North American Music and also due to the higher amortization of intangible assets related to the AMG, DF Concerts and Signatures acquisitions and certain artist rights agreements. -- ($21.8) million - Decreased gain on the sale of operating assets primarily due to gains recorded in 2007 on the sale of an amphitheater, an office building, two music theaters, seven clubs and two other non-core assets. Other information -- For the year ended December 31, 2008, our total capital expenditures were $186.9 million, of which maintenance capital expenditures were $25.0 million, down from $45.2 million in 2007. We also incurred $161.9 million of capital expenditures for revenue generating projects during 2008, primarily due to the development and renovation of various venues including O2 Dublin arena (formerly The Point) in Ireland, House of Blues in Houston and Boston, the Hollywood Palladium and the AMG venue expansions in Sheffield and Leeds, as well as for our ticketing roll-out. -- As of December 31, 2008, our cash and cash equivalents were $199.7 million and our total long-term debt was $885.7 million, including $122.0 million outstanding on our revolving credit facility. Free cash as of December 31, 2008 was $32.2 million. Conference Call:
The company will host a teleconference today, March 2, 2009, at 5:00 p.m. Eastern Time, which can be accessed by dialing 888-603-6873 (U.S.) or 973-321-1019 (Int'l) and referencing passcode 70943698. To access the call via webcast, please visit the Investor Relations section of the company's website at www.livenation.com/investors. Please visit the website approximately ten minutes prior to start time to ensure a connection. Additional statistical and financial information to be provided on the call, if any, will be posted supplementally under that same link. For those who are not available to listen to the live broadcast, a replay will be available shortly after the call on the Live Nation website through March 9, 2009.
About Live Nation:
Live Nation's mission is to maximize the live concert experience. Our core business is producing, marketing and selling live concerts for artists via our global concert pipe. Live Nation is the largest producer of live concerts in the world, annually producing over 22,000 concerts for 1,600 artists in 33 countries. During 2008, the company sold over 50 million concert tickets and drove over 70 million unique visitors to LiveNation.com. Live Nation is transforming the concert business by expanding its concert platform into ticketing and building the industry's first artist-to-fan vertically integrated concert platform. The company is headquartered in Los Angeles, California and is listed on the New York Stock Exchange, trading under the symbol LYV. For additional information about the company, please visit www.livenation.com/investors.
CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2008 2007 2006 (in thousands except share and per share data) Revenue $4,166,838 $3,755,470 $3,294,471 Operating expenses: Direct operating expenses 3,324,672 3,003,610 2,678,869 Selling, general and administrative expenses 655,351 592,983 468,970 Depreciation and amortization 147,467 116,834 123,628 Goodwill impairment 269,902 - - Loss (gain) on sale of operating assets 1,108 (20,654) (9,987) Corporate expenses 52,498 45,854 33,863 Operating income (loss) (284,160) 16,843 (872) Interest expense 63,023 61,753 37,194 Interest income (10,192) (13,476) (11,025) Equity in (earnings) losses of nonconsolidated affiliates (2,264) 5,058 (1,716) Minority interest expense 1,426 6,160 11,449 Other income-net (28) (147) (489) Loss from continuing operations before income taxes (336,125) (42,505) (36,285) Income tax expense (benefit): Current (24,057) 34,919 24,879 Deferred 8,132 7,649 10,334 Loss from continuing operations (320,200) (85,073) (71,498) Income from discontinued operations, net of tax 88,435 73,137 40,056 Net loss (231,765) (11,936) (31,442) Other comprehensive income (loss), net of tax: Unrealized holding gain (loss) on cash flow derivatives (9,094) (1,888) 104 Foreign currency translation adjustments (48,277) 37,579 27,032 Comprehensive income (loss) $(289,136) $23,755 $(4,306) Basic and diluted income (loss) per common share: Loss from continuing operations $(4.20) $(1.24) $(1.10) Income from discontinued operations 1.16 $1.07 $0.62 Net loss $(3.04) $(0.17) $(0.48) Weighted average common shares outstanding Basic 76,228,275 68,440,582 64,853,243 Diluted 76,228,275 68,440,582 64,853,243
The numbers above may be adjusted for final tax entries to be included in the Company's Form 10-K to properly reflect taxes related to discontinued operations as opposed to continuing operations but net loss is not expected to be impacted significantly, if at all.
CONSOLIDATED BALANCE SHEETS December 31, 2008 2007 (in thousands except share data) ASSETS CURRENT ASSETS Cash and cash equivalents $199,660 $338,991 Accounts receivable, less allowance of $10,376 in 2008 and $18,928 in 2007 217,286 264,316 Prepaid expenses 194,355 186,379 Other current assets 28,517 44,722 Total Current Assets 639,818 834,408 PROPERTY, PLANT AND EQUIPMENT Land, buildings and improvements 990,433 1,018,079 Furniture and other equipment 260,524 236,320 Construction in progress 41,282 51,725 1,292,239 1,306,124 Less accumulated depreciation 404,504 391,079 887,735 915,045 INTANGIBLE ASSETS Intangible assets-net 514,469 382,999 Goodwill 205,296 471,542 OTHER LONG-TERM ASSETS Notes receivable, less allowance of $562 in 2008 and $745 in 2007 672 1,703 Investments in nonconsolidated affiliates 18,519 23,443 Other long-term assets 212,148 122,963 Total Assets $2,478,657 $2,752,103 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $53,563 $79,273 Accrued expenses 378,992 511,636 Deferred revenue 225,664 259,868 Current portion of long-term debt 48,637 36,345 Other current liabilities 64,381 18,348 Total Current Liabilities 771,237 905,470 Long-term debt 837,076 786,261 Other long-term liabilities 146,360 91,465 Minority interest liability 61,722 61,841 Series A and Series B redeemable preferred stock 40,000 40,000 Commitments and contingent liabilities STOCKHOLDERS' EQUITY Preferred stock - Series A Junior Participating, $.01 par value; 20,000,000 shares authorized; no shares issued and outstanding - - Preferred stock, $.01 par value; 30,000,000 shares authorized; no shares issued and outstanding - - Common stock, $.01 par value; 450,000,000 shares authorized; 78,528,724 and 74,893,005 shares issued and outstanding in 2008 and 2007, respectively 785 749 Additional paid-in capital 993,005 940,848 Retained deficit (362,706) (130,941) Cost of shares held in treasury (505,811 shares in 2008) (7,861) - Accumulated other comprehensive income (961) 56,410 Total Stockholders' Equity 622,262 867,066 Total Liabilities and Stockholders' Equity $2,478,657 $2,752,103 CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2008 2007 2006 (in thousands) Cash flows from operating activities Net loss $(231,765) $(11,936) $(31,442) Reconciling items: 86,059 85,848 118,343 Depreciation Amortization of intangibles 62,163 34,980 9,824 Goodwill impairment 282,939 - - Impairment of other operational assets 16,035 - - Deferred income tax expense 8,132 7,649 10,334 Amortization of debt issuance costs 3,964 2,095 736 Non-cash compensation expense 34,556 29,191 3,432 Gain on sale of operating Assets (165,448) (51,226) (11,640) Loss (gain) on sale of other investments - (64) 1,659 Equity in earnings of nonconsolidated affiliates (720) (4,806) (8,407) Minority interest income 1,587 7,869 12,209 Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: Decrease (increase) in accounts receivable 2,130 3,827 (55,504) Increase in prepaid expenses (25,603) (51,554) (11,837) Increase in other assets (107,376) (50,951) (1,762) Increase (decrease) in accounts payable, accrued expenses and other liabilities (48,473) 30,858 3,902 Increase (decrease) in deferred revenue 28,984 18,030 (22,219) Decrease in other-net - - - Net cash provided by (used in) operating activities (52,836) 49,810 17,628 Cash flows from investing activities Collection of notes receivable 334 1,910 4,427 Advances to notes receivable - (879) (2,420) Distributions from nonconsolidated affiliates 7,269 16,195 15,922 Investments made to nonconsolidated affiliates (250) (5,261) (14,657) Proceeds from disposal of other investments - 3,616 1,743 Purchases of property, plant and equipment (186,920) (116,849) (65,705) Proceeds from disposal of operating assets, net of cash divested 198,665 132,106 36,292 Cash paid for acquisitions, net of cash acquired (19,657) (124,285) (351,858) Purchases of intangible assets (65,460) (47,568) (796) Decrease (increase) in other-net (1,577) (44) 981 Net cash used in investing activities (67,596) (141,059) (376,071) Cash flows from financing activities Proceeds from long-term debt, net of debt issuance costs 420,327 399,781 339,491 Payments on long-term debt (369,610) (285,635) (78,253) Contributions from minority interest partners 8,847 - 33,188 Distributions to minority interest partners (3,042) (4,424) (1,415) Proceeds from exercises of stock options 636 466 - Proceeds from sales of common stock 5,454 - - Payments for purchases of common stock (28,628) - (24,717) Net cash provided by financing activities 33,984 110,188 268,294 Effect of exchange rate changes on cash (52,883) 6,172 313 Net increase (decrease) in cash and cash equivalents (139,331) 25,111 (89,836) Cash and cash equivalents at beginning of period 338,991 313,880 403,716 Cash and cash equivalents at end of period $199,660 $338,991 $313,880
Forward-Looking Statements, Non-GAAP Financial Measures and Reconciliations:
Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements regarding the potential health and growth of Live Nation's business; the company's concert and attendance counts; the company's ticketing platform and website traffic; and the company's anticipated achievement of its strategic objectives and the related benefits to its stockholders. Live Nation wishes to caution you that there are some known and unknown factors that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements, including but not limited to operational challenges in achieving strategic objectives and executing on the company's plans, the risk that the company's markets do not evolve as anticipated, the potential impact of the current general economic slowdown and operational challenges associated with building out the company's ticketing operations.
Live Nation refers you to the documents it files from time to time with the U.S. Securities and Exchange Commission, or SEC, specifically the section titled "Item 1A. Risk Factors" of the company's most recent Annual Report filed on Form 10-K and Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K, which contain and identify other important factors that could cause actual results to differ materially from those contained in the company's projections or forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date on which they are made. All subsequent written and oral forward-looking statements by or concerning Live Nation are expressly qualified in their entirety by the cautionary statements above. Live Nation does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.
This press release contains certain non-GAAP financial measures as defined by SEC Regulation G. A reconciliation of each such measure to its most directly comparable GAAP financial measure, together with an explanation of why management believes that these non-GAAP financial measures provide useful information to investors, is provided below.
Adjusted Operating Income (Loss) is a non-GAAP financial measure that the company defines as operating income (loss) before depreciation and amortization (including impairments), loss (gain) on sale of operating assets and non-cash compensation expense. The company uses Adjusted Operating Income (Loss) to evaluate the performance of its operating segments. The company believes that information about Adjusted Operating Income (Loss) assists investors by allowing them to evaluate changes in the operating results of the company's portfolio of businesses separate from non-operational factors that affect net income, thus providing insights into both operations and the other factors that affect reported results. Adjusted Operating Income (Loss) is not calculated or presented in accordance with U.S. generally accepted accounting principles. A limitation of the use of Adjusted Operating Income (Loss) as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue in the company's business. Accordingly, Adjusted Operating Income (Loss) should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with U.S. GAAP. Furthermore, this measure may vary among other companies; thus, Adjusted Operating Income (Loss) as presented herein may not be comparable to similarly titled measures of other companies.
Free Cash Flow is a non-GAAP financial measure that the company defines as Adjusted Operating Income (Loss) less maintenance capital expenditures, less net interest expense, less cash taxes, less net distributions to minority interest partners plus distributions from investments in nonconsolidated affiliates net of contributions to investments in nonconsolidated affiliates. The company uses free cash flow, among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than maintenance capital expenditures. The company believes that information about free cash flow provides investors with an important perspective on the cash available to service debt and make acquisitions. Free cash flow is not calculated or presented in accordance with U.S. generally accepted accounting principles. A limitation of the use of free cash flow as a performance measure is that it does not necessarily represent funds available for operations and it is not necessarily a measure of our ability to fund our cash needs. Accordingly, free cash flow should be considered in addition to, and not as a substitute for, operating income (loss) and other measures of financial performance reported in accordance with U.S. GAAP. Furthermore, this measure may vary among other companies; thus, free cash flow as presented above may not be comparable to similarly titled measures of other companies.
Free Cash is a non-GAAP financial measure that the company defines as cash and cash equivalents less event-related deferred income, less accrued artist fees, less collections on behalf of others plus prepaids related to artist settlements/events. The company uses free cash as a proxy for how much cash it has available to, among other things, optionally repay debt balances, make acquisitions and finance new venue expenditures. Free cash is not calculated or presented in accordance with U.S. generally accepted accounting principles. A limitation of the use of free cash as a performance measure is that it does not necessarily represent funds available for operations and it is not necessarily a measure of our ability to fund our cash needs. Accordingly, free cash should be considered in addition to, and not as a substitute for, cash and cash equivalents and other measures of financial performance reported in accordance with U.S. GAAP. Furthermore, this measure may vary among other companies; thus, free cash as presented herein may not be comparable to similarly titled measures of other companies.
Reconciliations of Non-GAAP Measures to Their Most Directly Comparable GAAP Measures
Reconciliation of Adjusted Operating Income (Loss) to Operating Income (Loss) - Three and Twelve Months ended December 31
Loss (gain) Adjusted Non-cash on operating compensa- sale of Depreciation Operating income tion operating and Goodwill income (loss) expense assets amortization Impairment (loss) ($in millions) For the three months ended December 31, 2008 North American Music $15.1 $9.2 $0.1 $27.1 $189.2 $(210.5) International Music 16.0 8.6 0.2 1.0 - 6.2 Artist Nation 11.2 2.2 0.7 15.6 80.7 (88.0) Ticketing (7.7) 1.3 - 2.2 - (11.2) Other and Eliminations 8.2 0.2 0.2 1.6 - 6.2 Corporate (14.4) 3.5 0.7 1.2 - (19.8) Total Live Nation $28.4 $25.0 $1.9 $48.7 $269.9 $(317.1) For the three months ended December 31, 2007 North American Music $18.7 $6.0 $0.1 $22.6 $- $(10.0) International Music 19.5 3.6 (0.2) 3.1 - 13.0 Artist Nation 1.4 1.2 - 9.4 - (9.2) Ticketing (2.5) 0.8 - 1.1 - (4.4) Other and Eliminations 6.1 - 0.3 2.4 - 3.4 Corporate (9.3) 5.9 - 1.6 - (16.8) Total Live Nation $33.9 $17.5 $0.2 $40.2 $- $(24.0) For the year ended December 31, 2008 North American Music $126.3 $11.7 $(0.5) $71.8 $189.2 $(145.9) International Music 88.7 9.4 0.2 22.1 - 57.0 Artist Nation (2.0) 4.4 0.6 36.1 80.7 (123.8) Ticketing (18.7) 1.6 - 5.6 - (25.9) Other and Eliminations 20.7 0.2 0.1 8.0 - 12.4 Corporate (45.2) 8.2 0.7 3.9 - (58.0) Total Live Nation $169.8 $35.5 $1.1 $147.5 $269.9 $(284.2) For the year ended December 31, 2007 North American Music $80.0 $9.2 $(6.7) $62.9 $- $14.6 International Music 78.4 4.1 (18.8) 14.9 - 78.2 Artist Nation 8.6 2.9 - 19.8 - (14.1) Ticketing (5.9) 1.3 - 3.3 - (10.5) Other and Eliminations 15.2 - 5.0 10.4 - (0.2) Corporate (35.2) 10.7 (0.2) 5.5 - (51.2) Total Live Nation $141.1 $28.2 $(20.7) $116.8 $- $16.8
Reconciliation of Adjusted Operating Income (Loss) to Free Cash Flow - Fourth Quarter
Q4 2008 Q4 2007 ($in millions) Adjusted operating income $28.4 $33.9 Less: Interest expense-net (15.6) (13.8) Cash Taxes 0.6 (12.5) Maintenance capital expenditures (3.3) (14.5) Distributions to minority interest partners (1.2) (1.1) Distributions from (contributions to) investments in nonconsolidated affiliates 2.3 4.9 Free cash flow $11.2 $(3.1)
Reconciliation of Cash and Cash Equivalents to Free Cash as of December 31, 2008
($in millions) December 31, 2008 Cash and cash equivalents $199.7 Deferred income $(209.8) Accrued artist fees $(10.8) Collections on behalf of others $(56.9) Prepaids related to artist settlements/events $110.0 Free cash $32.2
First Call Analyst:
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Source: Live Nation
CONTACT: media, John Vlautin, johnvlautin@livenation.com, or investors,
Linda Bandov, lindabandov@livenation.com, both of Live Nation, Inc.,
+1-310-867-7000; or Brad Edwards of Brainerd Communicators, Inc.,
+1-212-986-6667, edwards@braincomm.com, for Live Nation, Inc.
Web Site: http://www.livenation.com/
Profile: International Entertainment
posted by EntertainmentNews @ 2:36 PM
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